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Semiannually payments will be made into an account which earns 8.8% compounded semiannually. The payments will...

Semiannually payments will be made into an account which earns 8.8% compounded semiannually. The payments will begin on January 1, 2018 and end on January 1, 2026. Determine the size of the payments needed to accumulate $16,000 on January 1, 2026. Please show work!

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Answer #1

Information provided:

Future value= $16,000

Interest rate= 8.8%/2= 4.4% per semi-annual period

Time= 6 years*2= 12 semi-annual periods

The amount of semi-annual payment is calculated by entering the below in a financial calculator:

FV= 16,000

N= 12

I/Y= 4.4

Press the CPT key and PMT to compute the amount of semi-annual payment.

The value obtained is 1,040.6360.

Therefore, the size of the payment is $1,040.64 to accumulate $16,000.

In case of any query, kindly comment on the solution

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